June 2012

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The retail stock sector has performed great in 2012. The PowerShare Dynamic Retail Portfolio (PMR) is up 14% easily surpassing the S&P 500 (SPX) at 4.5% in 2012. The retail sector has been extremely strong throughout 2012. However, there is a big discrepancy within the sector itself. The best year to date performance has been in the discount and off price retail stocks while the luxury goods retailers have been devastated in 2012. A report from industry group The Conference Board showed consumer confidence had fallen in June to its lowest level since the start of the year, marking the fourth month of declines. The concerns about Europe's debt crisis, slow job creation and the latest correction in the S&P 500 weighed on shoppers' spirits and led to more sales in bargain retailers. This trend can be seen in the great performance of low price retail stocks and the decline in many luxury goods stocks. [more]

Recs

3

The market was looking good as stocks had enjoyed a two-week run that brought the S&P up more than 7% on hopes for additional stimulus from the Federal Reserve. Then, the DJIA drops 250 points a day after the Fed meeting. The stocks slide was accelerated by a bearish call from Goldman Sachs, which recommended clients build short positions in the broad S&P 500 index on expectations of more economic weakness. Investors should be concerned about the increasing uncertainty in the stock markets. Now is the time for investors to go into more defensive stocks with low betas and dividend payments. This means consumer staples or products that the population will continue to buy in tough times. One of the best places to be is in beverages. After all, we all need to drink! The non-alcohol beverages have been strong during market pullbacks. Here is a list of beverage stocks to consider. [more]

Recs

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Weakening business activity worldwide is hitting U.S. companies where it hurts, with more of them signaling disappointing results than at any time over the past decade. Many bellwether companies have come out in recent days with profit warnings, and the slowing in Europe has been cited as a major factor for those outlooks. Both Pepsi (PEP) and FedEx (FDX) have warned in the past few days. This indicates that it would be wise to be underweight multinationals with inordinately large exposure to Europe. The predominant stock safe haven of tobacco stocks are also being affected by this scenario. This is pushing more money managers to reduce holdings in Phillip Morris and being overweight Altria Group. [more]

Recs

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While the market seems to be working very hard, it has gone nowhere in the last few weeks. With no movement following the Greece elections, there is uncertainty about whether the market bounces or tanks. Investors concerned about the direction should look at low beta stocks that generally have lower volatility. Low volatility stocks with a reasonable valuation should hold up during an undecided market. These stocks are low beta, dividend payers with a good valuation and bullish outlook. [more]

Recs

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S&P recommends overweighting the S&P 500 Consumer Discretionary sector. Year to date through May 25, the sector index, which represented 11.2% of the S&P 500 Index, was up 10.62%, compared with a 4.5% rise for the S&P 500. There are 32 sub-industry indices in this sector, with Restaurants being the largest at 13.8% of the sector’s market value. Foreign exposure should continue to weigh on the group until Europe emerges from recession. We have noted that domestic companies have outperformed multinational companies since mid-August 2011 and we prefer companies with most of their sales in the US. [more]

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There are several dividend growers that recently increased their dividends by double-digits. In general, a dividend increase indicates financial strength and management’s positive earnings outlook to commit to an increased dividend in the quarters ahead. Here is a list of the most recent dividend increases: [more]

Recs

1

Mortgage REITs have had a nice market run so far during 2012. However, there are several REITs still within buying range. The best time to buy mortgage REITs when they are trading at or below book value. The REITs discussed below are trading near or below their respective book values. In addition, these mortgage REITs have a 10 rating (best rating) from the MSN StockScouter. I have compiled the list of mortgage REITs with current dividend yields above 12% trading near or below book value. [more]

Recs

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Insiders may sell shares for any number of reasons, but there is really only one reason to buy. With the amount of information they possess about the company, there must be something good happening. When I see an executive personally buying a big quantity of a stock, it raises my conviction to buy as well. Academic evidence backs up my gut instinct. Better than 30 years of research shows that companies with significant insider purchases tend to outperform the market for the 12 months after those purchases. Then, you add in stocks with high dividend yields to get paid while you wait. Last, you look at the consensus among analyst in the equity summary score to get a second confirmation about the prospects of the stock. [more]

Recs

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As investors know, when earnings grow price will follow. Consistent earnings growth is the hallmark of companies that increase shareholder value over the long term. This list of companies are rated 4 or 5-stars by S&P and have an A rating for earnings and dividends. These companies are also exploding their earnings in the trailing period and increasing EPS for the next year. The strong earnings growth makes these stocks a great addition to long term portfolios. [more]

Recs

2

The S&P 500, S&P 400, and S&P 600 experienced declines of 6.01%, 6.48%, and 6.27% during May 2012. So where can an investor go for less risk and better stock performance? The answer is stocks with higher quality rank outperformed lower quality stocks in May. In the S&P 500, S&P 400, and S&P 600 stocks with rank A outperformed stocks with rank C by 2.52%, 6.70%, and 3.98%. In the Russell 1000, Russell 2000, and Russell 3000 stocks with high quality A ratings outperformed by 5.26%, 4.65%, and 4.30%. [more]

Recs

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A company with excess capital will sometimes announce a stock buyback plan as one of many ways to return the capital to shareholders. A stock buyback, also known as a "share repurchase", is a company's buying back its shares from the marketplace. You can think of a buyback as a company investing in itself, or using its cash to buy its own shares. The idea is simple: because a company can't act as its own shareholder, repurchased shares are absorbed by the company, and the number of outstanding shares on the market is reduced. When this happens, the relative ownership stake of each investor increases because there are fewer shares, or claims, on the earnings of the company. [more]

2

The market pullback in recent weeks has created some opportunities for investors. The amount of fear in the stock market has investors jumping ship to get their money into perceived safer places. This just made a number of cheap stocks become even cheaper. I do not see a double-dip recession happening this year so this is an even better time to buy into stocks. I am looking for stocks that are cheap based on their forward PE ratios with good growth catalysts to improve earnings. These stocks are increasing their dividends and have a Bullish outlook in the next year. [more]

Recs

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The S&P 500 is down around 6.0% in the past month and 8.84% in the past two months. The S&P 500 had a year to date return of 12.8% at the start of April but the YTD return has fallen to 4.43% as of the end of May. With the pullback in the S&P 500, investor should take a closer look at the potential of total return investments. With a total return investment, you get the security of a dividend with a potential of price appreciation when the market moves higher in the future months. The market pullback has decreased these stock prices 8-10% which will add to the total price appreciation when the market rebounds. In addition, these stocks are positioned in growing industries. These are the stocks that have the potential of 30% in total return in the next year.[more]

Recs

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Since REITs are required to pay 90 percent of their taxable income to shareholders in the form of dividends, the decision to slash or suspend dividends is a sign that a REIT's core business is suffering. A dividend increase or reinstatement, however, can be viewed as a signal of strength. As many real estate sectors are improving, REITs are showing a better outlook for 2012 and 2013. The following REITs are showing strength in improving earnings and/or increased dividends in 2012. [more]